Bitcoin price flirts with the 50-day EMA as a breakdown to $7,200 looms.
BTC/USD price consolidation is set to continue before the breakdown based on the prevailing technical picture.
Bitcoin price is in a lull or rather a deep slumber where almost no action is taking place. However, when you take a closer look at the daily chart using the 50-day Exponential Moving Average (EMA), the price has been bouncing off the 50 EMA repeatedly. In this case, the moving average is the support that is being tested multiple times. In other words, the longer Bitcoin hits and bounces off the 50 EMA, the weaker the support becomes.
A contrary motion was witnessed in April where Bitcoin kept hitting on the 50 EMA but then it was it was resistance. This movement eventually weakened the resistance and Bitcoin pumped strongly upwards. The testing of the 50 EMA support is actually sending out a bearish signal. Once the moving average support is shattered, expect Bitcoin price to plummet to $7,200, however, $8,500 would be tested first.
BTC/USD daily chart
At the time of writing, Bitcoin is trading right at the 50 EMA. The largest crypto is likely to experience consolidation ahead of a drop, but note that at the moment the volume is ultra-low. Moreover, looking at other parameters such as the Relative Strength Index (RSI), we can tell that the drop will not be immediate. BTC/USD sideways trading action which is currently reinforced by the Moving Average Convergence Divergence (MACD) as it clings tightly to the midline, is set to hold for some time.
Support is also embraced at $9,200 and is likely to continue holding as it has done in the last 24 hours. Upward price action could continue to delay because most buyers have retreated to the sidelines in order to avoid the choppy markets. Therefore, the resistance at $9,250 and $9,300 could remain in place much longer.
Luke has had a long interest in financial technology, especially cryptocurrency and blockchain. With a Bachelors degree in Journalism and Media, Luke is dedicating his writing skills for the digital currency sphere.He can be contacted at email@example.com